RAMALLAH, West Bank - Arab banks are reluctant to transfer millions of dollars in desperately needed foreign aid to the Hamas-led government for fear of US retribution, the Palestinian finance minister acknowledged Tuesday, confirming the Islamic militants are no closer to paying weeks-overdue government salaries.

Hamas and Palestinian President Mahmoud Abbas, meanwhile, said they are trying to pull away from a violent confrontation in their standoff over control of security forces.

Since the Hamas-led Cabinet was sworn into office last month, financial pressure by Israel and Western countries has left the government broke and unable to pay the salaries of 165,000 workers. Paychecks were due on April 1, and the next scheduled payday is less than a week away.

Hamas has turned to Arab and Muslim countries for help, but whatever money it has raised remains stuck in an account in Egypt, said Finance Minister Omar Abdel Razek.

He said Arab banks that do business in the Palestinian territories are afraid to transfer the money, fearing they could be punished under US anti-terrorism laws.

Abdel Razek, a US-educated economist, said the government is discussing the matter with Arab banks. “We hope to find a solution in the near future,” he said. The Palestinian government needs about $160 million (euro 130 million) a month to break even, more than half of it from foreign aid.

Hamas has raised about $70 million (euro 57 million) so far from Iran and Saudi Arabia, he said. He said the Saudis also have pledged an additional $70 million (euro 57 million), while Iran has offered another $50 million (euro 40 million).

“The money is available. The problem is getting it here,” Abdel Razek said. He said the funds have already been converted to euros to lessen the possible American connection.

The US has labeled Hamas, which is committed to Israel’s destruction, a terrorist group. Earlier this month, it barred Americans from most business dealings with the new Palestinian government under “existing terrorism sanctions.”

American officials have not said whether these restrictions would apply to transfers by non-American banks, but Hamas says lenders operating in the West Bank and Gaza Strip aren’t taking any chances. “We hope that the banks that don’t deal with the United States will transfer this money for us,” Abdel Razek said.

The Jordan-based Arab Bank, the largest bank in the Palestinian areas, declined comment.

International pressure unfairly hurting Palestinians

In Turkey, Abbas said international financial pressure on Hamas is unfairly hurting Palestinians.

“The burden is on the Palestinian people,” he said, adding that officials are looking for a “new mechanism” to deliver the aid. He did not elaborate.

Israeli security commanders have expressed concern about the possibility that suitcases of cash could be spirited into Gaza through tunnels from Egypt used for arms smuggling, according to Israeli officials speaking on condition of anonymity because they were not authorized to give details to the media.

Even if the money reaches the Palestinians, it won’t solve Hamas’ long-term problems. The US and European Union have cut off hundreds of millions of dollars in direct aid to the Palestinians. Also, Israel has suspended monthly transfers of about $55 million (euro 5 million) in taxes it collects for the Palestinians.

The Palestinian government is the biggest employer in the West Bank and Gaza.

Israel and the Western donors have said they will restore the flow of money only if Hamas renounces violence, recognizes Israel’s right to exist and accepts past peace agreements. Hamas has rejected the demands.

Alongside the financial woes, Hamas and the Abbas’ rival Fatah movement have been locked in an increasingly contentious power struggle. The conflict, focused on control over security forces, has escalated into armed clashes in recent days.

Abbas said he is concerned by the fighting, but he won’t allow the situation to spin out of control. “We will never let a civil war occur,” he said.

In Gaza, Prime Minister Ismail Haniyeh of Hamas said he appreciated Abbas’ efforts to reduce tensions.

“Thank God that we contained and stopped these incidents. My message to our people is that we should maintain and protect the national unity,” he told reporters before a Palestinian Cabinet meeting.

Abbas and Haniyeh both have claimed authority over the myriad security forces. Most of the security personnel are Fatah loyalists.

Late last week, Hamas announced the formation of a new security agency to be headed by a militant at the top of Israel’s most-wanted list. Abbas vetoed the appointment, drawing condemnation from Hamas’ top leader that sparked days of unrest.

Democracy at its worst.

Al-Hamdulillah (From a Married Muslimah) La Howla Wa La Quwata Illa BiLLah - There is no Effort or Power except with Allah's Will.

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